Brian Hagaman

1. Procurement Service Science
6/22/13
Brian Hagaman
847-922-3943
hagaman@us.ibm.com
www.linkedin.com/in/hagaman

2. 6/24/2013 2
M&A, consulting, business management & strategy, sales management,
leadership, shared services, supply chain, procurement, sustainability
Drive for results, Timely decision-making, Taking ownership,
Leadership, People Engagement
Broad and deep industry C-Level relationships, lead people and
organizations
Consulting,SalesManager,Solutiondesign
IndustrialSector,developindustryinsight,
clientrelationships,electronics,mining,
chemical&petroleum,consumerproducts,
retail,banking,financialservices,
Globalsalesleadership,buildorganization
UnitedStates,Canada,Brazil,China,
Japan,Asean,EU,
plan to grow my T-shape
1. Depth
2. Breadth
3. Strength
4. T-Shaped service
innovation expertise
Brian Hagaman’s T
Shape analysis

3. 6/24/2013 3
Promote service innovation and link service
innovation in procurement
Procurement Service is the application of
knowledge and resources for the
benefit of others
Procurement Service innovators are often
“T-shaped” professionals with depth &
breadth of knowledge, and the ability
to span boundaries and rapidly
synthesize diverse perspectives.
Modern procurement service systems and
platforms scale-up new service
offerings globally rapidly (innovation).
Category expertise
Leadership – influence
Cost Reduction
Value improvement
Procurement Engineers
Category Managers
Leadership skills
Strategic sourcing systems -Emptoris
Procure to pay systems - ERP
Procurement One Place
Supplier Connections
Jim Spohrer - ISSIP Intro 20121020

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Procurement is becoming a more important
function
Service
Value
Service
Execution
Service
Capability
Service
Delivery
Procurement Service Systems are composed of
People: CPO, Category Managers, Purchasing
Agents, Procurement Engineers
Processes: source to contract, procure to pay
Technologies: procure to pay, catalogues,
spend analytics, Sourcing/Auctions/bid
evaluations, contract management, supplier
lifecycle management
Organizations: center led, global, hybrid
shared information: spend, categories, demand
Create and deliver value to customers,
suppliers/providers, other stakeholders

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The insights from the 2013 CPO Study are derived from the analysis of
‘top performing’ procurement organizations; those that are capable,
influential, and innovative
Influential
Capable
Innovative
Top Performers
• Consists of the companies
that fall into all three
procurement performance
categories
• 168 respondents - 15% of
total
• Disproportionate share with
more than $100B in revenue
in this category
• 45% of top performers
based in North America
Innovative
• Based on self reported
assessments of innovation
and use of new technologies
• 306 respondents - 27% of
total
• Large share of respondents
from Aerospace,
Entertainment media and
publishing, and Banking
Capable
• Based on self reported
assessments of execution
capabilities
• 607 respondents - 54% of
total
• Large share of respondents
from Telecommunications,
Entertainment media and
publishing, and Aerospace
Influential
• Based on self reported
assessments of
influence
• 377 respondents - 33%
of total
• Large share of
respondents from
Pharmaceuticals,
Automotive,
Telecommunications
5 Source: IBM Institute for Business Value Analysis, 2012 Procurement Officer Survey (n=1128), 2013 Procurement Leader Interviews (n=15)
Study Context & Methodology
Low Performers
• 429 Companies
• Represents 38% of the total
• 62% report revenue between $1B
and 5B and another 20% report
revenue between $5B and $10B
© Copyright IBM Corporation 2013

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Capable: Align and Development of Procurement Capability
• quality of services
• Improving on procurement basics is
essential, especially for those companies
whose procurement organizations are not
yet delivering optimal results
Service
Capability

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Top procurement organizations are investing in procurement
technologies to help automate the ‘mechanics’ of procurement and thus
enable staff to add more value
7
Procurement Automation
Rate the effectiveness of the following procurement technologies at your firm
Top Performers
Sourcing/ RFX solutions
Supplier relationship management
Contract management solutions
Spend analysis solutions
Source: IBM Institute for Business Value Analysis, 2012 Procurement Officer Survey (n=1128), 2013 Procurement Leader Interviews (n=15)
Top Performers
Top Performers
All Respondents
Top Performers
Above Average/ Excellent
Effectiveness
Average EffectivenessBelow Average/ Poor
Effectiveness
Questions: Q20. Please rate the current effectiveness of the following procurement technologies at your company. This question was used to define effectiveness,
which is a component of procurement performance. Responses do not sum to 100% because between1 and 5% of respondents indicated n/a
Observations
• Substantial gaps are
evident between the
effective use of technology
among top performing
procurement organizations
and their lower performing
peers
Implications
• The vast majority of top
performers consistently
report above average or
excellent effectiveness for
all procurement
technologies, so under the
right circumstances these
solutions are believed to
have a positive
performance impact
All Respondents
All Respondents
43% All Respondents
Maintain focus on procurement fundamentals
38%14%
80%16%1
42%36%15%
86%8%2
50%32%14%
89%7%3
53%30%14%
94%5%1
© Copyright IBM Corporation 2013

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Category management and procurement
engineering are delivering service value
• Innovation
• Global Growth
• Improve business performance across all functions with data-driven
insights
• develop and implement cost reduction strategies
• Develop supplier base
• Implement Design Change & business model changes.
Service
Value

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© Copyright IBM Corporation 2013

11. 6/24/2013 11
Growth of procurement engineering as a major
change to enterprise strategy that companies are
adopting
• Procurement engineering is focused on improving quality, cost in product design, and
getting technical expertise into its supply chain/procurement process.
• Procurement (service) engineers design interactions with the same rigor industrial
engineers design physical processes
• Corporations have grown their group of procurement engineering experts, with
engineering backgrounds, are dedicated to making sure things are designed
efficiently for the supply chain and decide if a product has certain materials or
processes that could be substituted with something else, an expert would make that
recommendation to the engineer/designer.
• Procurement engineering is focused on value management, that extends beyond
procurement in an organization and requires cooperation between numerous
participants, both internal and external.
• Multi functional teams, led by procurement engineering, are represented by
procurement, engineering, manufacturing, marketing, and logistics as well as key
supplier personnel jointly seek solutions to lower total cost, improve performance, or
improved accommodation of customer requirements.
• Procurement engineering is driving Pro-Active Customer Cost Reduction in the areas
of Operations, Supply Chain Management, Materials and Cost Management via
Lean, Six Sigma and Kaizen methodologies.
• Procurement engineering is participating in initial product development activities, such
as FMEA, contribute cost reduction ideas and sourcing recommendation.

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Procurement and sourcing requires a broad
range of analytical and decision making skills
• Influential
• resource optimization
• global efficiencies with market responsiveness
• Optimize operations globally
• Reinvent processes and integrate functions, removing complexity and
uncovering new efficiencies
• Partnering with other companies in the supply chain that offer better
efficiencies
Service
Execution

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© Copyright IBM Corporation 2013

14. 6/24/2013 14
In many organizations the role of procurement/
sourcing in “services procurement” and the
services supply chain is not clearly defined.
• This creates unclear expectations in service contracts and a lack of a
definitive process for the procurement of services.
• Procuring services
• Contracting for services - Service Contracts – Master Service
Agreement (MSA) and Statement of Work (SOW)
• Services Procurement, supplemental labor, staff augmentation
• Supplier-Side Economics: Making Vendor Relationships an Enduring
Source of Competitive Advantage
• Acquisition Integration – Services design, Synergy,
• Analytics as a service
• Innovation in outsourcing, Procurement practices and incentives
focused on cost are real blocker to effective innovation in outsourcing
relationships.

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More information
• CPO Study landing page at:
www.ibm.com/business/value/chief-procurement-officer
• Questions
• Offer
•
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